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Here's Why Publishers Are Using the Cloud to Tackle 'Technical Debt'

Stocks in this article: AMZN NYT GOOG YHOO MSFT ADBE V MA SBUX

NEW YORK (TheStreet) -- Privately owned Advance Publications' Conde Nast unit, publisher of iconic magazines including The New  Yorker, Vogue and Wired, decided earlier in July to ditch its own data center, moving its operations to Amazon's (AMZN) clouds. The move puts under scrutiny one of the biggest problem currently faced by publishers -- legacy technical debt.

Like a financial debt that costs money to be repaid, technical debt is the cost associated to the use of old technology, said Tom Hendrickson, founder and CEO of Mitre Media in Edmonton, Alberta. Publishers who create and deliver content in the cloud have a huge financial advantage over those who don't.

Investors should look at the computer platforms used by the companies they own and measure that legacy technical debt against margins and switching costs, to see whether the companies they are buying are worth their money.

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Aged technology makes it hard for publishers like New York Times Co. (NYT) to make a profit on run of network ads from Google (GOOGL) AdSense, or the ad network co-managed by Yahoo! (YHOO) and Microsoft’s (MSFT) Bing.

As a recent Adobe analysis of the Internet ad market, the tools of these two ad networks let advertisers cherry-pick target audiences while paying run of network rates for ads.

Yahoo!, which now runs multiple content sites, is gaining a huge advantage over traditional publishers by hosting on a cloud-based platform. But that message is not getting through to all publishers.

For instance, the New York Times recently announced, with some fanfare, a new rendering system for its site  for which it wrote its own JavaScript engine and PHP framework. Software costs money to write and maintain, and Hendrickson believes the Times created more legacy debt for itself with this decision.

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